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All-Cash Home Sales Surpassed FHA-Backed for the First Time Since 2007 in Q3 2022

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Financing

All-Cash Home Sales Surpassed FHA-Backed for the First Time Since 2007 in Q3 2022

The share of cash purchases has climbed steadily for each of the past three quarters to reach a 20-year high, while new home sales financed through FHA are falling


October 31, 2022
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In Q3 2022, 11,000 (7.5%) of all new home sales were financed through FHA, while all-cash purchases accounted for 14,000 (9.5%) of the total share, according to the most recent Quarterly Sales by Price and Financing report from the U.S. Census Bureau. This is the first time that all-cash purchases have surpassed FHA-backed home sales since 2007.

Conventional loans continued to dominate home financing in the third quarter, accounting for 77.6% of the total share of new home sales, a 1.2 percentage point quarter-over-quarter increase, NAHB Eye on Housing reports.

Although cash sales typically make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 22% of existing home transactions were all-cash sales in September 2022, down from 24% in August and 23% in September 2021.

The average interest rate of a 30-year fixed rate mortgage increased 100 basis points, quarter-over-quarter. Over the four quarters ending Q3 2022, the average rate of a conventional 30-year FRM spiked 369 basis points—the largest yearly increase since 1981.

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